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Available online at www.sciencedirect.com Revista de Administração http://rausp.usp.br/ Revista de Administração 52 (2017) 479–491 Technology Management The use of dynamic capabilities to boost innovation in a Brazilian Chemical Company A utiliza¸ cão das capacidades dinâmicas para impulsionar a inova¸ cão em uma Empresa Química Brasileira La utilización de las capacidades dinámicas para impulsar la innovación en una empresa química brasile˜ na Cristiane Froehlich a,, Claudia Cristina Bitencourt b , Marilia Bonzanini Bossle b a Universidade Feevale, Novo Hamburgo, RS, Brazil b Universidade do Vale do Rio dos Sinos, São Leopoldo, RS, Brazil Received 30 May 2016; accepted 23 February 2017 Available online 8 September 2017 Scientific Editor: Paula Sarita Bigio Schnaider Abstract Dynamic capabilities seek to explain how competitive advantages can be built in rapidly changing environments. This study aims to assess how the application of dynamic capabilities can contribute to the expansion of innovation capabilities. Data was collected on ten semi-structured interviews with executives from a chemical company, and analyzed using qualitative content analysis. Results indicate that the application of dynamic capabilities contributes to the development of innovation capabilities through the consolidation of the first dynamic capability (sensing), which fosters innovation. Sensing can be considered an organizational capability, resulting from the integration between organizational strategies and the innovation practices of the organization as a whole. This study brings the following contributions the need to include a new microfoundation in the sensing capability, which in this study is called ‘processes to manage innovation on a strategic level’ and the need to adapt another microfoundation related to the sensing capability, called ‘processes oriented toward collaboration with suppliers to complement and stimulate innovations within the company’. It is suggested that these processes should be reassessed in terms of their potential to generate and complement organizational innovation. © 2017 Departamento de Administrac ¸˜ ao, Faculdade de Economia, Administrac ¸˜ ao e Contabilidade da Universidade de ao Paulo FEA/USP. Published by Elsevier Editora Ltda. This is an open access article under the CC BY license (http://creativecommons.org/licenses/by/4.0/). Keywords: Innovation capability; Dynamic capabilities; Microfoundations Resumo As capacidades dinâmicas procuram explicar como vantagens competitivas podem ser construídas em ambientes que mudam rapidamente. Neste estudo tem-se como objetivo analisar como a aplicac ¸ão dos microfundamentos das capacidades dinâmicas pode contribuir para a expansão da capacidade de inovac ¸ão. Os dados foram coletados por meio de dez entrevistas semiestruturadas com executivos de uma empresa química, e analisados por meio da análise de conteúdo qualitativa. Os resultados indicam que a aplicac ¸ão dos microfundamentos das capacidades dinâmicas contribui para o desenvolvimento da capacidade de inovac ¸ão, através da consolidac ¸ão da primeira capacidade dinâmica (sensing), que estimula a inovac ¸ão. Sensing pode ser considerada uma capacidade organizacional, resultante da integrac ¸ão entre as estratégias organizacionais e as práticas de inovac ¸ão da organizac ¸ão. Além disso, este estudo traz as seguintes contribuic ¸ões: a necessidade de incluir um novo microfundamento na Corresponding author at: RS - 239, 2755, CEP 93352000, Novo Hamburgo, RS, Brazil. E-mail: [email protected] (C. Froehlich). Peer Review under the responsibility of Departamento de Administrac ¸ão, Faculdade de Economia, Administrac ¸ão e Contabilidade da Universidade de São Paulo FEA/USP. https://doi.org/10.1016/j.rausp.2017.08.007 0080-2107/© 2017 Departamento de Administrac ¸˜ ao, Faculdade de Economia, Administrac ¸˜ ao e Contabilidade da Universidade de ao Paulo FEA/USP. Published by Elsevier Editora Ltda. This is an open access article under the CC BY license (http://creativecommons.org/licenses/by/4.0/).

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Page 1: online at  Revista de Administração

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Available online at www.sciencedirect.com

Revista de Administração

http://rausp.usp.br/Revista de Administração 52 (2017) 479–491

Technology Management

The use of dynamic capabilities to boost innovation in a Brazilian ChemicalCompany

A utilizacão das capacidades dinâmicas para impulsionar a inovacão em uma Empresa QuímicaBrasileira

La utilización de las capacidades dinámicas para impulsar la innovación en una empresa químicabrasilena

Cristiane Froehlich a,∗, Claudia Cristina Bitencourt b, Marilia Bonzanini Bossle b

a Universidade Feevale, Novo Hamburgo, RS, Brazilb Universidade do Vale do Rio dos Sinos, São Leopoldo, RS, Brazil

Received 30 May 2016; accepted 23 February 2017Available online 8 September 2017

Scientific Editor: Paula Sarita Bigio Schnaider

bstract

ynamic capabilities seek to explain how competitive advantages can be built in rapidly changing environments. This study aims to assess how thepplication of dynamic capabilities can contribute to the expansion of innovation capabilities. Data was collected on ten semi-structured interviewsith executives from a chemical company, and analyzed using qualitative content analysis. Results indicate that the application of dynamic

apabilities contributes to the development of innovation capabilities through the consolidation of the first dynamic capability (sensing), whichosters innovation. Sensing can be considered an organizational capability, resulting from the integration between organizational strategies and thennovation practices of the organization as a whole. This study brings the following contributions the need to include a new microfoundation in theensing capability, which in this study is called ‘processes to manage innovation on a strategic level’ and the need to adapt another microfoundationelated to the sensing capability, called ‘processes oriented toward collaboration with suppliers to complement and stimulate innovations withinhe company’. It is suggested that these processes should be reassessed in terms of their potential to generate and complement organizationalnnovation.

2017 Departamento de Administracao, Faculdade de Economia, Administracao e Contabilidade da Universidade de Sao Paulo – FEA/USP.ublished by Elsevier Editora Ltda. This is an open access article under the CC BY license (http://creativecommons.org/licenses/by/4.0/).

eywords: Innovation capability; Dynamic capabilities; Microfoundations

esumo

s capacidades dinâmicas procuram explicar como vantagens competitivas podem ser construídas em ambientes que mudam rapidamente. Nestestudo tem-se como objetivo analisar como a aplicacão dos microfundamentos das capacidades dinâmicas pode contribuir para a expansão daapacidade de inovacão. Os dados foram coletados por meio de dez entrevistas semiestruturadas com executivos de uma empresa química, enalisados por meio da análise de conteúdo qualitativa. Os resultados indicam que a aplicacão dos microfundamentos das capacidades dinâmicasontribui para o desenvolvimento da capacidade de inovacão, através da consolidacão da primeira capacidade dinâmica (sensing), que estimula a

novacão. Sensing pode ser considerada uma capacidade organizacional, resultante da integracão entre as estratégias organizacionais e as práticase inovacão da organizacão. Além disso, este estudo traz as seguintes contribuicões: a necessidade de incluir um novo microfundamento na

∗ Corresponding author at: RS - 239, 2755, CEP 93352000, Novo Hamburgo, RS, Brazil.E-mail: [email protected] (C. Froehlich).Peer Review under the responsibility of Departamento de Administracão, Faculdade de Economia, Administracão e Contabilidade da Universidade de São Paulo

FEA/USP.

https://doi.org/10.1016/j.rausp.2017.08.007080-2107/© 2017 Departamento de Administracao, Faculdade de Economia, Administracao e Contabilidade da Universidade de Sao Paulo – FEA/USP. Publishedy Elsevier Editora Ltda. This is an open access article under the CC BY license (http://creativecommons.org/licenses/by/4.0/).

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480 C. Froehlich et al. / Revista de Administração 52 (2017) 479–491

capacidade de sensing, que neste estudo é chamado de “processos para gerenciar a inovacão em um nível estratégico” e a necessidade de adaptaroutro microfundamento relacionado com a capacidade sensing, chamado de “processos orientados para a colaboracão com os fornecedores paracomplementar e estimular inovacões dentro da empresa”. Sugere-se que estes processos devem ser reavaliados em termos de seu potencial de gerare complementar a inovacão organizacional.

© 2017 Departamento de Administracao, Faculdade de Economia, Administracao e Contabilidade da Universidade de Sao Paulo – FEA/USP.Publicado por Elsevier Editora Ltda. Este e um artigo Open Access sob uma licenca CC BY (http://creativecommons.org/licenses/by/4.0/).

Resumen

Las capacidades dinámicas tratan de explicar cómo ventajas competitivas pueden ser construidas en entornos que cambian rápidamente. En esteestudio se analiza cómo la aplicación de los microfundamentos de las capacidades dinámicas puede contribuir a la expansión de la capacidad deinnovación. Se han recogido los datos por medio de diez entrevistas semiestructuradas con ejecutivos de una empresa química, y se les ha aplicadoel análisis de contenido cualitativo. Los resultados indican que la aplicación de los microfundamentos de las capacidades dinámicas contribuye aldesarrollo de la capacidad de innovación por medio de la consolidación de la primera capacidad dinámica (detección), que fomenta la innovación.La detección puede ser considerada como una capacidad organizacional que resulta de la integración entre las estrategias de organización y lasprácticas de innovación de la organización. Se aportan, además, las siguientes contribuciones: la necesidad de incluir un nuevo microfundamento enla capacidad de detección, que en este estudio se llama “procesos para la gestión de la innovación en un nivel estratégico”; y la necesidad de adaptarotro microfundamento relacionado con la capacidad de detección, que se traduce en “procesos dirigidos a la colaboración con los proveedores paracomplementar y estimular la innovación dentro de la empresa”. Se sugiere que estos procesos deben ser reevaluados en términos de su potencialpara generar y complementar la innovación organizacional.© 2017 Departamento de Administracao, Faculdade de Economia, Administracao e Contabilidade da Universidade de Sao Paulo – FEA/USP.Publicado por Elsevier Editora Ltda. Este es un artıculo Open Access bajo la licencia CC BY (http://creativecommons.org/licenses/by/4.0/).

Palavras-chave: Capacidade de inovacão; Capacidades dinâmicas; Microfundamentos

Palabras clave: Capacidad de innovación; Capacidades dinámicas; Microfundamentos

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Dynamic capabilities seek to explain how competitivedvantages can be achieved in rapidly changing environments.hey include the capacity to: (1) sense and shape opportuni-

ies and threats; (2) seize opportunities; and (3) preserve annterprise’s competitiveness by means of improvements, com-inations, protection and, when required, reconfigurations of annterprise’s tangible and intangible assets (Day & Schoemaker,016; Teece & Leih, 2016; Teece, Pisano, & Shuen, 1997; Teece,eteraf, & Leih, 2016; Teece, 2007).

This approach may explain why some companies manage todentify and incorporate opportunities from the external envi-onment into their routines and processes, by managing andssembling resources to obtain positive results while otherompanies are unable to develop such capabilities (Ambrosini,owman, & Collier, 2009).

Since dynamic capabilities include those capabilitiesequired to address consumer changes and technological oppor-unities (Teece, 2007), it can also support the understandingf innovation capability application, which is one of the focusf this study – understanding the relationship between innova-ion, dynamic capabilities and innovation capability. Innovationapability facilitates the incorporation of knowledge and learn-ng related to new products, services and processes. Innovationepends mostly on the way this process is conducted, i.e. itepends on the resources, routines and companies’ manage-ent capability (Tidd, Bessant, & Pavitt, 2008). Thus, strong

ynamic capabilities have an “orchestration dimension” thatllows the organization to quickly idealize, test and implementew innovations (Teece & Leih, 2016).

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Although research on dynamic capabilities is consideredonsistent in studies on strategic management, and are associatedith organizational change, innovation and competitive advan-

age (Güttel, Konlechner, & Müller, 2011), the area is still underriticism since the concept is mostly theoretical and difficult tomplement (Arend & Bromiley, 2009). In order to address thisssue, Teece (2007) introduced the concept of microfoundations

distinct skills, processes, procedures, organizational struc-ures, decision rules, and disciplines that will combine to allowhe implementation of the dynamic capabilities of sensing, seiz-ng and reconfiguring (Teece, 2007) – that represent an attempto operationalize it through routines and processes.

Nevertheless, microfoundations’ definition is still too broadnd require further investigation on regard to its ability toxplain and put on practice dynamic capabilities. Therefore,his paper seeks to investigate two gaps observed in the stud-es concerning dynamic capacities: (a) the relationship betweenynamic capabilities, innovation and innovation capability; (b)he understanding and operationalization of microfoundations,hich have not yet been sufficiently explained in the literature.Briefly, this article seeks to understand the role of microfoun-

ations in the consolidation of dynamic capacities to leveragennovation in a company in the Brazilian chemical industry.lthough the relationship between innovation and dynamic

apabilities has already been addressed in previous studiesDay & Schoemaker, 2016; Ellonen, Wikström, & Jantunen,009; Ellonen, Jantunen, & Kuivalainen, 2011; Katkalo, Pitelis,

Teece, 2010; Kindström, Kowalkowski, & Sandberg, 2012;

asian, Sankaran, & Boydell, 2012; Teece & Leih, 2016; Teecet al., 2016), we believe that dynamic capacities contribute indi-ectly to this relationship that is mediated by the capacity for
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nnovation. In other words, the operationalization of dynamicapacities, through microfoundations, contributes to the consoli-ation of innovation capability and this, in turn, helps to leveragennovation in the investigated company as demonstrated in thisaper.

This paper thus aims to answer the following research ques-ion: how can innovation be boosted by developing and applyingynamic capabilities according to the microfoundations sensing,eizing and transforming? This study also aims to analyzeow the application of microfoundations of dynamic capaci-ies can contribute to the expansion of innovation capability.he focus on microfoundations allows the researchers to ver-

fy the applicability of the concept in a detailed way, since onef the weaknesses of the approach of the dynamic capacitiess the lack of definition of units of analysis. Kindström et al.2012) emphasize that demonstrating microfoundations are fun-amental for building dynamic capacities and that it significantlyffects the success of innovation. This happens through the pro-ess variation that forms the basis of the development of dynamicapacities, according to Pasian et al. (2012).

To answer the proposed question, we have chosen to develop case study in view of the need for furthering understandingicrofoundations in a specific context. Having that in mind, a

hemical company – Artecola – was selected, considering thathe chemical sector is a dynamic area in which innovation isssential. This company is recognized as innovative due to: (a)ts recognition for innovation in different fields; (b) innovations part of the mission and organizational values of the company;c) its development of product and process patents; (d) the inclu-ion of innovation as part of the company’s social reports, asell as the 30 innovation awards received in 2015. Innovation

s an element that differentiates Artecola from other chemicalnterprises.

The next section presents the theoretical framework on theontextualization of innovation and innovation capability, asell as the concept of dynamic capabilities and their respectiveicrofoundations. Next, methodological procedures are listed.ection ‘Results’ provides an overview of Artecola and thenalysis of the results of this research. Finally, the final con-iderations and the contributions of this study are presented.

nnovation and the innovation capability

Innovation is the search for, discovery, experimentation,evelopment, imitation and adoption of new products, new pro-uction processes and new organizational configurations (Dosi,988). Innovation requires improvements and changes in theperation of complex technical and organizations systems, in arocess of trial, error and learning (Tidd et al., 2008). Innova-ive companies are those that find the means to explore the latentotential of new ideas and combine factors in a more optimizeday (Francis & Bessant, 2005).The development of the capabilities required for innovation

s the result of complex interactions between incentive struc-ures, human resources, technological efforts and institutionalactors (Lall, 1992). Companies and innovation processes cane considered path dependent, which means that companies

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nistração 52 (2017) 479–491 481

hat were innovative in the past tend to innovate more in theresent (Carrillo-Hermosilla, Del Río, & Könnölä, 2010; Hor-ach, 2008). Other authors (Pavitt, 2005), however, refer to theoncept of path creation and minimize the role of trajectory inefining the new directions for a company, highlighting contin-encies associated with the sector or the technological field. Inhat sense, according to Schumpeter’s circular flow, economicsends toward equilibrium, and that equilibrium will not neces-arily be the same point as before (Schumpeter, 2008).

In order to achieve successful innovations, companies needo combine different types of knowledge, capabilities, skills andesources, i.e. they need to develop the capability to detect andeize opportunities, not only targeting new markets but also bynding new ways to thrive in established and mature marketsFagerberg, 2005; Knight, 1967; Schumpeter, 2008; Tidd et al.,008). In a context of change and innovation, dynamic capa-ilities become an important concept to organize resources in

distinct way and increases agility to organizational processesy establishing routines and procedures that translate a com-any’ strategies into specific actions that are accessible to allrganizational levels.

Given that innovation is a result of company’ specific char-cteristics, some authors such as Francis and Bessant (2005)lassify different innovation types according to the internalapabilities required to achieve them. Innovation capability is,herefore, an ability to formulate and implement innovationtrategies and it is associated with the capability to create,nlarge and modify resources employed for innovation in ordero develop new products, services, processes and/or marketsDodgson, Gann, & Salter, 2008). Innovation capability can alsoe understood as a type of organizational strategic capability.ore specifically, it has to do with the alignment of innova-

ion practices with organizational strategies, in order to generatealue to the company, to its consumers and to other stakehol-ers. It usually takes place in a deliberate, systematic way andtilizes one or more models to develop radical or incrementalnnovation.

According to Tidd et al. (2008), innovation is a process ratherhan an isolated event. It must therefore be managed in a dynamicnd systematic manner and not focus on specific areas only.n that sense, innovation capability should not be restricted to&D. It should be part of the corporate culture and encompass

he entire organizational environment (Tidd et al., 2008). Forhis to be achieved, these authors point out that innovation muste carried out in a structured manner, following routines thatharacterize each step in the progress of innovation (new prod-cts, services or processes). Thus, we highlight the importancef managing innovation as a dynamic capability, which is theey discussion of this paper.

ynamic capabilities

Teece et al. (1997) disseminated the concept of dynamicapabilities, which encompasses the capacity to perceive andeize new opportunities, to reconfigure and protect knowl-dge resources and assets, as well as competencies and

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omplementary resources and assets, in order to achieveustainable competitive advantage.

This pioneering concept remains as a basic reference totudies in the area of resources, capabilities, competences andtrategy. A literature review on dynamic capabilities shows simi-arities and complementarities in the definitions used by differentesearchers that adopt this analytical approach. Since the 1990s,any theoretical efforts have been made to further develop the

oncept in an attempt to implement it in sectors such as tourismCamisón & Monfort-Mir, 2012), services (Salunke, Weerawar-ena, & McColl-Kennedy, 2011) and the food industry (Beske,and, & Seuring, 2014). This paper explores the developmentf dynamic capabilities in a chemical company.

Dynamic capabilities are alternatively defined as a processEisenhardt & Martin, 2000; Eriksson, 2014; Galunic & Eisen-ardt, 2011; Shuen, Feiler, & Teece, 2014), as a skill (Al-Aali

Teece, 2014; Andreeva & Chaika, 2006; Augier & Teece,008; Davies, Dodgson, & Gann, 2016; Helfat & Peteraf, 2015;eece et al., 1997; Teece, 2007, 2012, 2016) and as the capabil-

ty (Winter, 2003; Zahra & George, 2002; Zahra, Sapienza, &avidsson, 2006) to integrate, combine, build, reconfigure and

hange organizational resources and routines to foster changend achieve competitive advantages. Thus, the dynamic capa-ility can be conceptualized as a process or skill or capabilityo integrate, combine, build, reconfigure and transform organi-ational resources and routines to generate changes and gainompetitive advantage.

Also, with reference to the diversity of concepts of dynamicapabilities, it is possible to identify similarities related to:a) rapid changes in the environment; (b) processes, skills, capa-ilities, resources, routines and assets; (c) capability to integrate,ombine, build, reconfigure, modify and change resources;d) path and position dependence; and (d) competitive advan-age. The combination of these expressions, as presented byeece et al. (1997), has become the basis for dynamic capabilities

pproach.

This study is grounded on the discussion on dynamic capabil-ties proposed by Teece (2007), whose framework has influenced

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able 1ynamic capabilities and their corresponding microfoundations.

ynamic capabilities Microfoundations

apability to identifynvironmental contextssensing)

(1) processes to direct internal R&D work; (2) procesdevelopments in exogenous science and technology;

and customer innovation.

apability toeize/incorporatepportunities (seizing)

(1) customer solutions and business models (selectiocustomer orientation); (2) selection of enterprise bouthat allow the advantage of first movers, even in the pprotocols (how to allocate resources, balance in the inof the innovation culture to ensure the employees’ lo

apability to manage threatsnd transformationsreconfiguring)

(1) decentralization and decomposability (the decentrdemands and to new technologies that may be acquiridentified by competitors and add value – the skill ofimportance); (3) governance and knowledge managemknowledge and learning, formation of alliances and joproperty).

ource: Adapted from Teece (2007).

nistração 52 (2017) 479–491

any other authors (Day & Schoemaker, 2016; Ellonen et al.,009, 2011; Katkalo et al., 2010; Kindström et al., 2012; Pasiant al., 2012; Teece & Leih, 2016; Teece et al., 2016) who aimf integrating strategy and innovation and provide ‘a modelhat highlights the most critical capabilities management needso sustain the evolutionary and entrepreneurial fitness of theusiness enterprise’ (2007, p. 1322). Teece’s framework (2007)resents three dynamic capabilities: (a) the capacity to identifycosystem contexts (sensing); (b) the capacity to seize and incor-orate opportunities (seizing); and (c) the capacity to managehreats and transformations (reconfiguring).

These dynamic capabilities are supported by microfounda-ions, an extremely relevant concept in this context, given thathey refer to routines and processes that will allow the imple-

entation of dynamic capabilities. Teece (2007) emphasizes themportance of distinguishing between these concepts becauseifferent processes in a company can represent important ele-ents for dynamic capabilities. In other words, equal routines

nd processes in different companies may or may not becomeynamic capabilities facilitators. These processes and routinesre the elements that can sustain innovation in a competitivenvironment to increase a company’s competitive advantagever time (Day & Schoemaker, 2016; Pasian et al., 2012; Teecet al., 2016). Table 1 presents the dynamic capabilities and itsicrofoundations.In line with the concept of dynamic capabilities proposed by

eece (2007), which is required to align organizational strategiesith innovation, the main assumption of this study, which will be

nvestigated in the case of Artecola, is presented: dynamic capa-ilities, as proposed by Teece (2007), can boost the developmentf innovation capability through its microfoundations.

Fig. 1 shows the conceptual map of the study.Fig. 1 shows the framework employed in this study to investi-

ate the application of the three dynamic capabilities by meansf their respective microfoundations. These microfoundations

re necessary because they create the routines and processeshat support the development and application of dynamic capa-ilities. Once dynamic capabilities are put into practice, it is

ses to tap supplier and complement innovations; (3) processes to tapand (4) processes to identify target market segments, changing customer needs

n of target customers, value delivery and capture; selection of technologies,ndaries (definition of the scope of activities – definition of norms and limitsresence of imitators); (3) routines for the selection of decision makingvestment portfolio); (4) routines to build loyalty and commitment (alignment

yalty and commitment).

alization of decisions increases agility and capability to respond to customers’ed); (2) cospecialization (shared used of unique assets that are not easily

the manager in identifying and using this combination is of particularent (development of the processes of integration of external and internal

int ventures to facilitate the governance of technology transfer and intellectual

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C. Froehlich et al. / Revista de Administração 52 (2017) 479–491 483

- identifying contexts(sensing);- seizing/incorporatingopportunities(seizing); - managingthreatsandtransformations(reconfiguring). (Teece,2007)

Internal Environment of the Organization /Innovation Contex

Inn ova tion capabil ity

Dynamic capabili ties

Management/processes Strategy

Microfound ationsof dynamiccapabilities

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ossible to boost a company’s innovation capability. Moreover,e believe that innovation capability could leverage innovation.owever, we prefer consider this relationship indirectly since

here are many other factors that could influence or leveragennovation such as abortive capacity, learning based on practiceinternal context), knowledge transfer and interorganizationalearning (external and relational context) among others. Thisast level of analysis will not be address in the present paper,hich focus on understanding the development of innovation

apability based on dynamic capabilities and their respectiveicrofoundations.

ethod

A qualitative case study was carried out for this study, sincehis approach contributes to enhance an existing theory, beingnfluenced by social context, allowing the establishment of newelationships to be investigated and revealing complex processesShah & Corley, 2006). Therefore, this case study aimed to ana-yze the contribution of dynamic capabilities and their respective

icrofoundations to the development of the innovation capabil-ty. In this regard, the chosen company should meet the followingelection criteria: (a) be recognized in the market for its innova-ion capability; (b) have innovation as a deliberate organizationaltrategy; (c) embody an innovation-oriented culture (innovationhould be part of company’s mission, vision and organizationalalues).

This led to the selection of Artecola Indústria Química. This

ompany stands out because (a) it is widely recognized in theifferent segments it operates; (b) innovation is part of its mis-ion and values; (c) it produces product and process patents;d) innovation is part of its social reporting.

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ual map.

authors.

A protocol was developed to guide data collection, as aecommended strategy for increasing the reliability of the casetudy (Yin, 2005). In view of the exploratory/descriptive char-cter of the study, the protocol was designed using the twoategories identified in the theoretical framework: innovationapability and dynamic capabilities. The former focusses onnderstanding the innovation context while the latter tries todentify the three dynamic capabilities and its respective micro-oundations, as proposed by Teece (2007).

Interviews and document analysis were carried out in theata collection stage to complement the information collected.emi-structured, in-depth interviews were conducted with man-gers of different levels and areas, indicated by the company.ata on the different areas represented by the managers wasalidated using triangulation. All interviews were recorded withhe consent of the participants and then transcribed for analysiso that any doubts could be clarified and potential misinterpre-ations eliminated. This contributes to ensuring the integrity andeliability of data analysis.

To protect participants’ identity, they were randomly assigned sequential identifier (Participant 1 – E1, Participant 2 – E2 ando on). Table 2 summarizes the participants’ profiles.

The total number of interviews (10) fulfilled the saturationriteria, i.e. the repetition of the data collected indicated thaturther interviews were not required. An additional method-logical precaution was the triangulation of data, which in thistudy was based on the participants’ different managerial areasnd positions and on the different data collection formats usedinterviews and documentary analysis).

Secondary data were obtained from documents supplied

y the company. Documental data is relevant in case studypproaches (Yin, 2005), as the main purpose of informationbtained from documents is to strengthen and support other
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484 C. Froehlich et al. / Revista de Administração 52 (2017) 479–491

Table 2Participants’ profiles.

Job/position Length of service inthe company

Education

Technology Manager 13 months Chemistry technician. BSc Chemistry. MSc Organic Chemistry. PhD MaterialsEngineering.

Technology Projects Coordinator 7 years Chemistry technician. BSc Chemistry. MBA Business and Project Management.Occupational Health, Safety and EnvironmentCoordinator

3 years Chemistry technician. BSc Environmental Engineering. BSc OSH. InternationalMBA Environmental Management.

Management and Innovation Analyst 5 years Chemistry technician. BSc Production Engineering (in progress).Planning and New Businesses Manager 17 years BSc Commercial Engineering.Coordinator of the Francisco Xavier KunstFoundation

3 years BA Social Science. Specialist, HR Planning and Management. MA Education.

Environmental Analyst 2½ years Chemical Engineering.Internal and Institutional Marketing Coordinator 1 year Journalism.Development Consultant 6 years BA Business. MBA Strategy and Innovation.Organizational Development Director 3 years BSc

Source: By the authors.

Table 3Categories of analysis.

Category Subcategory

Innovation capability(a) Contextualization.(b) Innovation types.

Dynamic capabilities

(a) Capabilities and respective microfoundations:- capability to identify environmental contexts (sensing);- capability to seize/incorporate opportunities (seizing);- capability to manage threats and transformations

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ources of evidence, particularly to supply details. The fol-owing Artecola documents were examined: (a) the company’social report; (b) book “60 anos: solucões inovadoras que unem”60 years of innovative solutions that bind); (c) company’sebsite; (d) environmental management system handbook; (e)

rticles printed in the company’s monthly newsletter.All data collected were processed using qualitative content

nalysis, a method by which key elements are broken down intoategories that match the theoretical framework adopted. Cate-orization is identified by Selltiz, Jahoda, and Cook (1965) asn effective technique for data organization and reduction ashe information is grouped into a limited number of categories.he following categories were used in this study: (1) innova-

ion capability – taking into account organizational contexts andnnovation types; (2) dynamic capabilities – the three capabilitiessensing, seizing and reconfiguring) and their respective micro-oundations were analyzed to determine how they contribute tooosting the innovation capability at Artecola Indústria QuímicaTable 3).

These categories were created following Bardin’s recommen-ations (2010), by which elements are first isolated and thenrouped together according to the following characteristics: (a)utually exclusive, i.e. each element belongs to a single cate-

ory; (b) homogeneity: the mutually exclusive principle depends

f the homogeneity of the categories, so a single criterion shoulde used to determine how the category is organized; (c) perti-ence: a category is considered pertinent when it is adapted

sos

Accounting. MBA Business Management. MBA Social Technology.

o the material of analysis selected and when it belongs to theelected theoretical framework, i.e. it is suitable to the researchim; (d) objectivity and reliability, i.e. the categories should belearly defined to eliminate any doubts concerning the allocationf elements; (e) productivity: a set of categories is productives it provides elements that are rich in inference indexes, newssumptions and concrete data.

To ensure the validity of the study, in addition to the pro-edures listed above (protocol, triangulation and saturation),ontent analysis was carried out using the NVivo 10 softwareo compare previously analyzed qualitative data. Therefore,ata analysis was carried out in three phases: (a) pre-analysis;b) exploration of the material; and (c) data treatment, inferencend interpretation.

esults

This chapter offers an overview of the Artecola group andontextualizes the company’s innovation capability according tohe analysis of the interviews conducted in the study. Next, thennovation capability is analyzed in terms of dynamic capabili-ies and their respective microfoundations. Finally, contributionsrom the first dynamic capability (sensing) are highlighted as theajor theoretical and practical implication in this research.

ompany overview and its innovation capability

Artecola was founded in 1948 and it is, still today, a privatelyeld family business that is managed by a Shareholders’ Coun-il and a Board of Directors. The company’s headquarters areocated in the state of Rio Grande do Sul, in Southern Brazil. Theompany has 11 units in Brazil and 8 overseas (Latin Americand China). Artecola Indústria Química manufactures adhesivesnd laminates for the footwear, furniture, textile and automotiveectors.

trategy and a cornerstone of the company from day one, it wasnly formalized as a strategic guideline in 1997, when the firsttrategic plan of the organization was issued. At the time, the

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ompany defined its mission statement as follows: ‘deliveringnnovative solutions to the value chains where it operates toenerate optimal returns to all stakeholders’.

This strategic alignment and the formalization of the inno-ation concept resulted in a number of benefits, includingn increase in gross revenues year after year (Participant 5),aterializing the company’s major innovation goals to deliver

omplete solutions by adding value and generating results (Par-icipant 2). Innovation also facilitated other strategic processes,uch as company’s international insertion (Participant 5).

Including innovation in the strategic plan was crucial to pro-ote an ‘innovation culture’ within the company. As a result,

he company gradually put into place routines that, over time,enerated learning on innovation. In fact, innovation is said to beart of Artecola’s DNA and it features in the company’s missiontatement and values (Participant 1).

In order to foster and disseminate a culture of innovation, annitiative called ‘program of ideas’, whose aim was to encouragehe participation of all employees, was created and implementedn the 1990s. According to Participant 2, ‘[the program] has

specific operation process and it is run by the planning andew businesses area, which coordinates [the program] to opti-ize results and foster innovation among staff’. Participant 1

nderscores the fact that ‘innovation is present in all messages,peeches and welcome discourses address at the beginning ofach semester. [. . .] it reflects the attitude of top management,nd the top-down characteristic of the cultural process of inno-ation is. Innovation is pervasive because of the characteristicsf the company’.

It is worth mentioning that the company’s strategic innova-ion guideline points out at two different types of innovation:nnovation in solutions (products and services) and innovationn processes. According to Participant 2, ‘innovation in solutionss innovation that generates results and value to consumers, it isnnovation in market-oriented products and services, innovationhat improves quality for consumers, increases their produc-ivity, reduces costs or makes their lives easier, [these] maye breakthrough or incremental innovations’. For Participant, ‘product innovations are pursued by means of partnershipsnd joint ventures’, which ‘boost learning and the develop-ent of new routines’ (Participant 2). Innovation in services

s complementary to innovation in products and is identified byhe main areas of the company (commercial, marketing, tech-ical and organizational development) for further assessmenty the Strategy and Innovation Committee (Participants 1 and). Innovation in processes, which refers to internal process,eeks to ‘provide improvement leaps in productivity, efficiency,ost reduction, simplify processes and improve internal qual-ty’ (Participant 5) and it is implemented by work teams thatork to foster continuous improvements and provide solutions

o one-off problems.It was observed that innovation is not limited to a single area

f the company. Tidd et al. (2008) point out that the innovation

apability should not be limited to research and developmentR&D) but it should be part of the corporate culture and encom-ass the whole of the organizational environment. To achievehis, these authors emphasize that innovation has to be conducted

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n a structured format, according to routines that characterizeach step in the development of innovation (new products, ser-ices or processes).

Data indicates that Artecola has developed its innovationapability by directing its strategic alignment toward innova-ion processes, which corroborates the concept of innovationapability proposed by Dodgson et al. (2008). These authorstate that innovation capability can be understood as a strate-ic organizational capability. More specifically, it is related tohe alignment of innovation practices with organization’s strate-ies to add value to the company and its consumers and othertakeholders.

According to the interviews, innovation at Artecola is a resultf organizational processes that are aligned with their businesstrategy, i.e. innovation is not restricted to an organizationalrocess. It is rather a strategy that is part of the company’strategic plan, culture and routines. It is possible to claimhat the company generates new products, services and pro-esses through the innovation capability accumulated along itsistory.

This section contextualized innovation capability at Artecoland highlighted the fact that innovation is aligned with com-any’s strategy and integrated into the company’s strategic plan.t was possible to confirm that innovation is seen by partici-ants as a consolidated strategy that is part of the corporateulture. It was observed that innovation at Artecola is dividednto innovation in solutions (products and services) and inno-ation in processes. The next section offers some reflections onnnovation capability vis-à-vis dynamic capabilities and theirespective microfoundations.

dentification of dynamic capabilities and their respectiveicrofoundations

The first dynamic capability is the capability to identify envi-onmental contexts (sensing). In this regard, Artecola has beenbserving and analyzing products, processes and services ofultinational chemical companies since the 1970s to identify

nd create new needs for its consumers. After some time, therocess to identify opportunities was formalized and, in theords of Participant 4, ‘the greater the stakeholders’ involve-ent, the more likely we are to identify environmental contexts,

ue to company’s interaction with them, allowing to facilitate todentify new needs’.

Table 4 lists the major managerial and operational processesdentified at Artecola for each microfoundation associated withhe sensing capability.

The four microfoundations listed by Teece (2007) can bedentified in the managerial and organizational processes atrtecola and are listed in Table 4, with the respective empha-

is on each of them, according to the participants’ perceptions.hen new opportunities are identified, they need to be incorpo-

ated. To achieve this, Teece (2007) recalls that it is necessary to

evelop the seizing capability, which directs the opportunitiesdentified.

The second dynamic capability proposed by Teece (2007) ishe capacity to seize/incorporate opportunities (seizing). Seizing

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Table 4Major managerial and organizational processes that undergird the sensing capability.

Microfoundations (Teece, 2007) Managerial and organizational processes at Artecola

(1) Processes that direct internalR&D work

Technology group – interdisciplinary team that works to translate stakeholders’ needs in quarterly meetings which analyzethe technologies controlled by the company and latent market needs. Findings from this group are widely publicized in thecompany’s R&D Intranet, a custom application developed by SAP to facilitate communication and oversight of project flowby employees – Participants 1 and 2;Clark and Wheelwright’s funnel methodology (1993) of innovation for the development of new products;Project management methodology (PMI).

(2) Processes to tap supplier andcomplementary innovations

Strategic guideline ‘growth with alliances’. To fulfill this guideline, the company permanently looks for partnerships (withsuppliers, customers and universities) to develop new products (Participants 5 and 6); The importance of internationalalliances to fulfill the ‘result-oriented innovation guideline’ was highlighted by Participant 4, while Participant 1 recalled thedefinition of strategies related to international alliances, which contributed to the development of technological productinnovations.

(3) Processes to tap developmentsin exogenous science andtechnology

Partnerships with local and international university research centers (Participant 1); projects in progress, mainly those ofbasic research (Participant 2); international recognition as a result of partnerships with leading players (Participant 10);Participation of representatives of the technology, commercial, technical and marketing areas in local and international fairswhere relevant state-of-the-art innovations and technologies are presented (Participant 2).

(4) Processes to identify targetmarket segments, changingcustomer needs and customerinnovation.

Market intelligence group that ‘carries out studies, surveys on trend, monitors the new products of the competition, togetherwith the technology area to identify new needs that can yield new products, services and markets (Participant 8);Events created by the company: (i) Consumer Office (where consumers can present their requirements and representativesof different areas in the company can discuss solutions – Participant 1), (ii) Inovarte (building proximity with consumers bymeans of visits and presentation of the whole range of products and services – Participant 1), (iii) Technology forum(two-day event with Brazilian and Latin American teams to foster synergies between different areas of the company,suppliers and customers, and identification of needs and opportunities – Participant 2), (iv) In3 Blog (open channel ofcommunication with the market, under the coordination of the marketing area; (v) Local and international fairs.

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s associated with the development of new products, processes,ervices and business models by means of the creation of orga-izational frameworks and the development of routines. It isossible to claim that this capability is developed once the pre-ious capability (sensing) is consolidated, i.e. once the companyas clear managerial and organizational processes in place.

Table 5 list the major managerial and organizational pro-esses identified that correspond to each microfoundation of theeizing capability.

Data collected showed that the company needed to improvets organization structure along the path to seize and incorpo-ate opportunities that were identified in order to address marketeeds and foster the creation of innovations in products, pro-esses and services. This was achieved by the creation of newreas to manage processes, such as new businesses planning,&D, the strategy and innovation committee and the technologyroup, all of which were described above, in the section on theensing capability. In addition, ‘internal programs were devel-ped to foster a culture of innovation and engage employees inhe dissemination of innovation on all levels of the organiza-ion’, as Participant 4 explained. It can thus be claimed that thereation of processes to assist the identification of environmen-al contexts (sensing capability) required the creation of newreas and improvements in existing areas to develop the seizingapability.

For Teece (2007), once an enterprise has defined managerial

nd organizational aspects to identify (sensing) and incorporateseizing) opportunities, it is necessary to develop the capabilityo manage threats and modifications (reconfiguring).

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This third, and last, capability refers to the activities requiredo maintain adjustments over the life of an enterprise, as its assetsnd structures are realigned (Teece, 2007).

Table 6 lists the main managerial and organizational pro-esses that were identified for each microfoundation of theeconfiguring capability.

In spite of the alliances mentioned, Participant 7 reiteratedhat, as far as the management of internal knowledge is con-erned, ‘some information is still departmentalized, we couldmprove cooperation in terms of information sharing; this wouldmprove innovation management’. To achieve this, actions suchs the implementation of Artecola Integrated Management Sys-em (SIGA) were conceived with the aim of ‘reconfiguringnformation flows and information sharing in a virtual environ-

ent’ (Participant 8). However, this system is still in the finaldjustments phase.

For the management of threats and transformations, it wasbserved that management plays a key role on the reconfiguringapability. In addition to identifying (sensing) and incorporatingseizing) opportunities, companies need to learn how to man-ge these capabilities to protect their internal assets. To achievehis, committees, groups and teams were set up at Artecolao manage and make decisions related to their department.he company developed the capability to manage technologi-al assets by establishing alliances with a number of partnersnd implemented an integrated management system to manage

nformation and knowledge.

Thus, the aim of this section, which dealt with data descrip-ion and analysis, was to present each of the dynamic capabilities

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Table 5Major managerial and organizational processes that undergird the seizing capability.

Teece’s microfoundations(2007)

Managerial and organizational processes at Artecola

(1) Customer solutions andbusiness model

- The company’s business model includes a set of interrelated activities to add value to consumers (Participant 3) which was basedon the strategic guidelines of the strategic plan (Participant 10).

(2) Selection of enterpriseboundaries

- Establishing alliances with consumers, suppliers, research centers and universities.

(3) Routines for the selectionof decision-makingprotocols

- Routines are developed by means of regular meetings (Participant 1) to assess the viability of new products and services; (b)formal meetings conducted by the strategy and innovation committee; (c) meetings conducted by the technology area to assess thestages of the innovation funnel model.

(4) Routines to build loyaltyand commitment

- Regular actions and activities, such as: (a) ‘Welcome’ event (held in January with all employees to direct and inform strategicintentions, the results of the previous year and new aims for the current year); (b) internal campaigns to reinforce DNA points(innovation, international insertion and sustainability), under the coordination of the organizational development area, whichpublishes newsletters, handbooks, magazines and leaflets to provide up-to-date information); (c) management and human resourcestraining initiatives to build staff loyalty and commitment; (d) organization of teams with staff from different areas to buildcommitment. This is associated with fostering innovation in processes; and (e) program of ideas (since 2004, a communicationchannel that engages staff, stimulates creativity and participation in the business and contributes to promote a culture of innovation(Participant 5).

Source: By the authors.

Table 6Major managerial and organizational processes that undergird the reconfiguring capability.

Microfoundations Managerial and organizational processes

(1) Decentralization anddecomposability

- Formation of strategic committees that make decisions relevant to their field of work, with a focus on the transition from a familymanaged to a professionally managed business. Creation of shareholders’ councils and a board of directors, which led to thecreation of decision-making committees.

(2) Cospecialization - Capability to manage technological assets and alliances to mobilize resources and innovation capabilities (Participant 4).

(3) Governance andknowledge management

- Governance to contemplate the development of internal and external knowledge integration processes and learning.- Artecola Integrated Management System (SIGA);- Alliances with consumers, suppliers, multinational companies and partnerships with research centers and university to gain accessto expertise and learning in order to improve and facilitate the innovation capability of the organization, as discussed above, andjoint ventures.

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nd their respective microfoundations, as proposed by Teece2007). It can be observed that these capabilities contributed tohe development of the innovation capability at Artecola throughhe creation of managerial and organizational processes.

It should be highlighted that complementarities betweenhese capabilities were identified. Most of the actions identi-ed in the first capability (sensing) are seen again in the other

wo. It is possible to say that a given action or activity identifiedn the first capability becomes the foundation for the develop-

ent of the second capability and so on. This redundancy is anmportant element in the analysis as it reflects efforts to identifyelevant points and converging actions. The next section presentsnd discusses the major contributions of dynamic capabilities tooosting innovation in the case studied, with a focus on theicrofoundations of the first capability.

ontribution of the sensing capability for boostingnnovation – implications for theory and practice

Innovation goes far beyond developing products – it includeshe capability to renew a business and the expansion and creationf new markets (Teece, 2007). Therefore, the ability to sense and

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hape opportunities and threats, represented by the first dynamicapability, must be fully developed.

Data indicated that the first dynamic capability (sensing) isonsolidated at Artecola, as a number of routines are in placeo support the creation and interpretation of new opportuni-ies through the establishment of organizational and managerialrocesses to incorporate these microfoundations (Day & Schoe-aker, 2016; Ellonen et al., 2009; Ellonen et al., 2011; Katkalo

t al., 2010; Kindström et al., 2012; Pasian et al., 2012; Teece &eih, 2016).

Sensing involves proactively creating hypotheses about theuture implications of new products, services and business mod-ls and the process of scenario planning can assist organizationsn preparing for change across multiple dimensions (Teece et al.,016). This section highlights major theoretical developmentsnd proposes a revised version of the second microfoundations well as a new microfoundation for the sensing capability inrder to expand the innovation capability of the company.

Teece’s second microfoundation (2007), described as ‘pro-esses for partnerships with suppliers to complement an

rganizational innovation is of paramount importance tortecola, which attempted to answer the following questionhen incorporating seizing to its routine: how can we compete in
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n increasingly globalized world, with large-scale competitorshat have advanced R&D capabilities and a global presence?he prevalent strategy in this case has been the creation of

nternational alliances, which is illustrated by partnerships withermany (Rhenoflex, Jowat), Italy (G.O.R.), France (Protech-ic, AEC Polymers), Switzerland (Forbo), USA (Spray Lock)nd China (Orisol). The establishment of strategic alliancess an agreement between two or more companies for the co-evelopment of a new technology or product (Tidd et al., 2008).t is considered an effective mechanism for access to externalources of knowledge (Capaldo, 2007; Gulati, 1998).

In the case of Artecola, the search for partnerships is notimited to complementing innovations, as suggested by Teece2007) but it is also used to introduce new products in the mar-et. Chesbrough (2006) stresses that external knowledge can bentegrated throughout the innovation process through incipientdeas to deepen applied research, through concepts ready to beeveloped in products, through products ready to the market orhrough distribution channels. The intentional use of inflows andutflows of knowledge aims to accelerate innovation and expandarkets (Chesbrough, 2006).The company is not limited to partnerships with suppli-

rs. Collaborations with suppliers, competitors, customers, endsers, institutions, partners from other industries facilitate thebility to perceive and interpret the future and to innovateKyläheiko & Sandström, 2007). Thus, this study suggests that

eece’s second microfoundation (2007) should be rewritten asollows: ‘processes to identify and establish partnerships to man-ge or complement organization’s innovations’.

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nistração 52 (2017) 479–491

In addition to the four microfoundations that undergird theensing capability, as suggested by Teece (2007), a new micro-oundation was identified from the empirical data collected,hich in this study is defined as ‘processes to direct innovationn a strategic level’. Quadros (2005) highlights the importance ofhe institutionalization of processes and routines for a structuredractice of innovation from a strategic perspective. Tidd et al.2008) emphasize that innovation is not an isolated event butather a process that must be managed in a dynamic and inte-rated way. In other words, it is not enough to manage or developkills in some isolated areas of the company, such as R&D, but

culture for innovation should be developed (Dobni, 2008).Pisano (2015) stresses that without an innovation strategy,

nnovation efforts can become a set of centralized practices in&D. Still, he says that companies rarely articulate strategies

o align their innovation efforts with their business strate-ies, generating performance problems. The problem is thatn organization’s innovation capability results from a systemf innovation, that is, it refers to a coherent set of interdepen-ent processes and structures that indicates how the companyddresses new problems and solutions. For this it is necessaryhe institutionalization of innovation processes from the strate-ic level of the organization to promote the alignment amonghe different areas and teams.

This new microfoundation is justified by the establishment,n 2007, of a ‘strategy and innovation committee’ at Artecola,

hose aim is to plan and manage innovation strategies. Commit-

ee membership includes shareholders, counselors and managerspecialized on the topic on innovation. The committee’s role,

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Table 7Microfoundations of the sensing capability.

Capability to identify environmental contexts (sensing)

(1) Processes to direct innovation on a strategic level (new);(2) Processes to direct internal R&D tasks;(3) Processes to tap supplier and not only complement but generate innovation(new);(4) Processes to tap developments in exogenous science and technology;(5) Processes to identify target market segments, changing customer needs andcustomer innovation.

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hich is shown in Fig. 2, is ‘to organize and make innovation sys-ematic in order to understand and anticipate market changes andxceed customer expectations’ (Participant 9) and ‘to align dif-erent innovation initiatives with our organizational strategies’Participant 2).

Fig. 2 shows that in order to meet the guideline and the strate-ic aims of innovation, the Committee works to identify andnterpret market signs, as well as capture, in a systematic man-er, the ideas proposed by employees. All selected signs anddeas are classified into five dimensions for the developmentf projects: consumers and markets, technology management,deas, leadership, and people and knowledge management. Afterlassification, these requests are transferred to the technologyroup, which allocates tasks, according to the required compe-encies, to implement the project.

It was then possible to analyze, from the data collected, thathe company’s innovation capability originates in the align-ent of strategic guidelines with the innovation and strategy

ommittee, which identifies, together with different companyreas, market opportunities and captures and assesses ideasrom internal and external sources. The inception of the strat-gy and innovation committee underscores the key role playedy innovation on the business of the organization and facilitateshe identification of environmental contexts to learn, interactnd assess information on external ecosystems expectations.he committee is also responsible to disseminate innovation

hroughout the company (Participant 1).For this reason, it was important to add a new microfounda-

ion to the sensing capability, which in this study was defineds ‘processes to manage innovation on a strategic level’. Thisicrofoundation was not identified by Teece (2007), but was

ased on the empirical data collected, which showed these toe an essential element in the conception and dissemination ofnnovation strategies. This microfoundation spurs the process ofranslating strategies into innovative actions.

This analysis of sensing at Artecola demonstrates its empha-is on the implementation of the guidelines proposed by thennovation and strategy committee, which works to ensure thatperational aspects are addressed swiftly. As a result, the com-any faces no hurdles when implementing strategies. On theontrary, it is quite agile in this aspect.

An analysis of the data on the sensing capability at Artecola

uggests that this capability is supported by the following micro-oundations (Table 7).

(‘i

nistração 52 (2017) 479–491 489

onclusions

In the literature review on dynamic capabilities, sensing, seiz-ng and reconfiguring capabilities proposed by Teece (2007)ere identified as potential contributors to the development of

nnovation capabilities. This study showed that this theoreticalramework is a key element in the development of innovationapabilities, and it is recommended for the study of organi-ational strategies, being associated with transformation andnnovation contexts. It is also characterized by the ongoing

obilization of resources to address changing business strate-ies in a dynamic environment. Because of these characteristics,ynamic capabilities approach offers a different perspective onnnovation capabilities and highlights their potential to generatepportunities for business renewal.

In the specific case of Artecola, it can be said that dynamicapabilities and their respective microfoundations have con-ributed to developing innovation capabilities by means ofoutines and managerial and organizational processes. The com-any established a system to innovate and pursue its strategicuideline.

Therefore, it is possible to highlight that (1) the major ele-ents that improve and contribute to expanding innovation in

his case are the strategic alignment and the formal innovationtrategy of the company, which led to the development of a cul-ure of innovation. Another relevant point is (2) the consolidationf the first dynamic capability (sensing) to boost innovation. Thisnsures sensing becomes a capability of the company, the orga-izational strategies and the innovative practices of the wholeompany are systematically arranged in a process that permeatesll areas and staff.

In this sense, the major theoretical contribution of this study is3) the addition of a new microfoundation to the sensing capabil-ty, namely ‘processes to manage innovation on a strategic levels a microfoundation of the sensing capability’, i.e. processeshat precede the processes to direct internal R&D tasks sug-ested by Teece (2007). The analysis of empirical data showedhat innovation at Artecola is not restricted to R&D. The creationf the strategy and innovation committee and of the technol-gy group, which comprehend managerial and organizationalrocesses that foster the capability to identify environmentalontexts, is quite relevant in this context. Actions in progress atrtecola point out at the need for processes to direct innovationsn a strategic level.

The need (4) to adjust the second microfoundation of theensing capability was identified, and it was defined as ‘pro-esses to identify and establish partnerships to manage oromplement an organization’s innovations’. It is suggested thathis process should be rethought to take into account its rele-ance to generate (and not only complement) innovation at therganization.

In the case of Artecola, it was observed that the search forartnerships takes place not only to complement innovationut also to introduce new products in the market. In addition,

5) partnerships are not limited to suppliers. Artecola has thegrowth with alliances’ strategic guideline, whose strategic aims the development of alliances. To comply with this strategic
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lanning guideline, the company is always searching for part-erships that can lead to the development of new products. Theseay take the form of partnerships with suppliers, customers, uni-

ersities, research centers or Brazilian and international firms toenerate or complement innovations.

It was observed that most of the actions identified in theensing capability feature again in the other two dynamicapabilities. It is possible to say that (6) a given action orctivity identified in the first capability operates as the foun-ation for the development of the second capability and son. (7) Redundancy is, therefore, an important element in thisnalysis as it reflects the effort to highlight what is relevantnd the convergence of actions, all of which amount to arocess-oriented complementary view of dynamic capabilities.

It was also observed that dynamic capabilities consist ofkills, processes and routines that enable the organization toanage and mobilize its resources and assets to address market

eeds and changes. Therefore, the dynamic capabilities foundn the internal environment promote organizational developmentnd support innovation capabilities.

As a final contribution, (8) the implementation of dynamicapabilities by means of organizational practices and routineshat are grouped according to their microfoundations shoulde highlighted. This effort aimed to address the gap found inynamic capabilities’ literature, which is considered extremelyheoretical and hard to understand given its application.

A limitation of this study refers to the fact that these findingsannot be extended to other situations, as this is a unique casetudy based on the perceptions of the company’s executives. Inddition, the focus of the study was the internal environmentnd did not extend to other stakeholders, such as consumers anduppliers, who could have contributed to widen the scope and theesult of the study. At last, we did not directly address the relationetween innovation capability and innovation. Our focus was onhe operationalization of innovation capability based on dynamicapabilities and theirs microfoundations.

We suggested that further research on this topic could (1)ddress the contribution of dynamic capabilities to leveragennovation (focus on strategic level) and also, understandingnnovation capability taking on board the perceptions of dif-erent stakeholders (focus on operational level but consideringrganizational external perceptions). This would improve theheoretical framework and pave the way to quantitative studieshat could validate the constructs adopted.

onflicts of interest

The authors declare no conflicts of interest.

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